Q Biomed Inc. (QBIO), a biotechnology company focused on innovative healthcare, currently finds itself in default on its July Debenture. Despite this setback, the company has continued to convert outstanding debts and extinguish embedded derivative liabilities throughout its fiscal year, which ended on November 30, 2022. This article will explore the ongoing financial situation and the potential impacts on Q Biomed Inc.’s operations.
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The July Debenture, issued to finance Q Biomed Inc.’s operations
is now past its maturity date, and the company has not received any default notice from the holder. The debenture allowed the holder to convert the amount invested at any time before maturity at the lower of $1.00 or 85% of the average of the four lowest volume-weighted average prices (VWAPs) during the 20 trading days prior to conversion. The initial floor price of the debenture was set at $0.35 per share.
Throughout the year, QBIO issued a substantial number of shares to convert outstanding debts
An aggregate 3,633,862 shares were issued to convert approximately $413,000 of outstanding debt, extinguishing approximately $159,000 of embedded derivative liability in the process. The company also recognized a loss on debt extinguishment of approximately $152,000 due to a reduction in the debenture’s conversion price.
In September 2021, QBIO entered into a securities purchase agreement with an accredited investor, selling a convertible debenture worth $2,200,000 with a 12-month term. The debenture included an original issue discount of $185,000 and an interest rate of 6% per annum. In October 2021, the debenture’s maturity date was extended for an additional three months to December 20, 2022.
As part of its ongoing debt conversion efforts, QBIO issued 21,025,054 shares of common stock to convert approximately $305,000 of outstanding debt
and extinguish $146,000 of embedded derivative liability during the year ended November 30, 2022. During the three months ended February 28, 2023, a further 33,823,234 shares were issued to convert approximately $214,000 of outstanding debt and extinguish another $146,000 of embedded derivative liability.
Despite its efforts to manage debt through conversions and extinguishment, QBIO’s overall financial position remains tenuous. The company currently has a Level 3 liability, measured at fair value, of $1,434,000 as of February 28, 2023.
QBIO has also faced legal disputes and challenges with unpaid consultants and contractors
WSI PBG, LLC, Activus Group, and Diligent Health Solutions, LLC have all filed lawsuits against the company to recover fees for consulting services, resulting in judgments against QBIO worth $203,784, $129,600, and $111,000, respectively.
Moving forward, Q Biomed Inc.’s future hinges on its ability to address its current financial difficulties, resolve ongoing legal disputes, and continue developing innovative healthcare products and technologies. With multiple challenges to overcome, it remains to be seen how the company will navigate these obstacles and meet its growth objectives.
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